In Summary

High electricity costs and lack of access to personal computers (PCs) have been blamed for the low ICT services penetration in Africa.

A study by Deloitte and GSMA shows that the high electricity charges increase the costs of running networks and slows the operators’ expansion plans in remote areas that are not connected to electricity.

Service providers also face operational challenges such as diesel pilferage, theft or tampering of equipment and damage of site security systems. These prevent efficient monitoring and control of the site.

The reliance on diesel power for both on-grid and off-grid sites, puts pressure on the operations and increases the cost of running networks and which is passed on to the consumers or hinders the operators from expanding as fast as they would wish.

“Africa ICT remains under-developed and suffers from poor access to electricity, low PCs and broadband penetration. Barriers to growth are reducing as demand increases and suppliers adapt to Africa states developing e-government and e-education,” read part of the Deloitte report.

Telkom Kenya said the high electricity charges have pushed up its operation costs.

Mickael Ghossein, Telkom Kenya CEO said that the firm spends between Sh500 million annually on electricity and another Sh700 million to run generators on its 1,000 sites, adding that operators should be exempted from paying fuel levies.

“We are asking to be exempted from paying fuel levy. Why should a telecommunication operator pay for fuel levy yet the diesel is used to run generators and not used on the roads,” he said.

The powering costs of a telecom base station site include the cost of grid power outage (diesel backup power costs), power equipment maintenance including diesel generators and other power systems components, battery maintenance, and overheads such as security.

The GSMA report covered Kenya, Uganda and Tanzania. The three countries have a total of 13,225 base station sites as of 2012.

Kenya has the highest number of base station sites with 5,565, followed by Tanzania with 4,593 sites and Uganda’s 3,067 sites.

Uganda has seen a growth of over 36 per cent in the number of sites over the last year while Kenya and Tanzania have recorded a growth of 27 per cent and 25 per cent respectively.

Of the total, 13,225 base station sites covering the population of the East African region, 9,957 are located in areas with access to the electricity grid and draw power from the commercial grid as a primary source.

The remaining 3,268 base station sites are off-grid and are located in areas without access to electricity. The off-grid sites rely on diesel generators to power their equipment.

Kenya recorded the highest ICT penetration levels of mobile services at 74 per cent of the population. This is followed by Tanzania at 62 per cent and Uganda at 42.4 per cent which falls far behind the other two countries—a potential market for growth in the coming years.

“Nearly 96 per cent of the uncovered population is rural and live in off-grid locations without access to electricity. Therefore, the future growth in network access needs to be in rural, off-grid locations. This poses huge infrastructure and operational challenges adding to the cost of running the network in rural off-grid locations,” said the report by the GSMA.

The report further noted that the lower average revenue per user (ARPUs) of rural off-grid population present challenges to the economic viability of network investments.

The rural off-grid sites are higher operational expenditure sites due to heavy dependence on diesel generators for powering the equipment. To reduce these costs, the operators have been urged to adopt green energy such as solar and wind power.

Kenya, Tanzania and Uganda combined provide potential green power opportunities for 30 per cent of the total installed base telecom sites; equivalent to 4,019 potential sites.

Of these potential sites, 23 per cent are unreliable grid sites with power outages in excess of 12 hours a day, while the remaining 77 per cent of sites which are completely off-grid are powered by diesel generators and battery hybrid power systems.

Tanzania has the highest number of potential sites for green power alternatives with a total of 1,970 sites. This is followed by Uganda with 1,453 sites and Kenya with 596 sites for potential green power opportunities.

Based on the current diesel consumption levels for on-grid and off-grid sites, GSMA estimates that for the 4,019 potential sites, a total saving of $59 million in energy operational expenditure and around 36 million litres of diesel can be realised annually by implementing green power alternatives.

This presents a saving of around 73 per cent in diesel consumption from current levels.